In every crisis, brands reach for the same blunt instrument: discounts. Most get it wrong and pay for it in margin, brand erosion and slower recovery. This is a smarter playbook: when to discount, how to justify it and why giving more beats charging less nearly every time.

As I write this, I’m in Dubai in the middle of a tenuous cease-fire involving Iran, US and Israel. I’m not going to get into the politics, just the impact of the war.

For businesses here, particularly in hospitality, it was immediate and brutal. Tourism paused almost overnight in an economy that depends on it. And the reflex is exactly what you’d expect: discounting. Hotels knocking down prices, in some cases making them fully redeemable against food and beverage; restaurants and other services impacted by the slowdown layering on offers, anything to generate movement.

It’s desperate. And it usually doesn’t work. Or at least, it doesn’t sustain itself. The places where it appears to work probably would have filled seats anyway because they have a loyal following. Others slash prices and still can’t get people through the door.

When demand suddenly softens, there are no good solutions. Keeping people employed and generating some volume—even at the expense of margin—is the natural reaction. Live to fight another day. Fair enough.

But if you believe you’ll survive the crisis, you also have to think about how you recover. And that becomes a lot harder when you’ve blown up your margins and muddied your brand with promotions that feel off-brand and reactive.

I’ve spent a good part of my career trying to stop companies from doing the one thing they instinctively do the moment things get shaky: slash prices. As if panic were a pricing strategy. I’ve sat in too many boardrooms watching otherwise rational executives turn into clearance rack managers overnight, trading brand equity for short-term cash, attracting bargain hunters who vanish the moment prices normalize, and creating those lovely peaks and valleys in sales that make forecasting feel like astrology.

My argument has always been simple: discounting is not evil. But undisciplined discounting is. And in a crisis, the difference between the two is the difference between protecting demand… and training your customers to wait you out.

I saw this play out in real time a few weeks ago. A restaurant I’d been to a few times offered 50% off brunch. That was enough to pull a group of us in one Saturday. It was excellent—lively, generous, great food, free-flowing drinks. We all said the same thing: it was worth every dirham at full price. At 50% off, it felt like a real bargain. A rare feeling in Dubai.  We said we’d come back.

A few weeks later, they ran another offer. This time, 25% off. And something strange happened. It didn’t feel like a deal. It felt expensive.

That’s the anchoring effect. The first price you experience becomes the reference point. Everything that follows is judged against it. By showing 50%, they didn’t just drive traffic. They reset the perceived value of the experience. At 25%, they weren’t offering a discount. They were asking us to accept a loss. That’s the problem with discounting. You’re not just changing price. You’re rewriting value. And in a crisis, that’s where most brands get it wrong.

Crisis doesn’t justify discounting. It demands precision pricing strategy. The smartest brands don’t ask, “How much should we cut?” They ask, “What behavior are we trying to trigger and what’s the least destructive way to do it?”

The Margin Grenade Problem: When Discounts Destroy More Than They Save

Most executives think discounting is a volume lever. In reality, it’s a margin trade-off that behaves exponentially, not linearly. Small cuts in price create disproportionately large gaps in profitability, which then require unrealistic increases in volume to recover. In a crisis, when demand is already fragile, that math becomes even more punishing—and yet it’s almost always ignored in the rush to “do something.”Deep discounts don’t just reduce revenue. They disproportionately crush profit. A 20% price cut can require a 50%+ increase in volume to recover the same profit depending on margins. That’s not a promotion. That’s a gamble.
According to McKinsey & Company, poorly managed discounting is one of the largest drivers of profit leakage across retail and consumer sectors. And yet, it’s still the first lever pulled in a crisis because it’s easy, visible and immediate. But easy doesn’t mean smart.
US fashion retailer J. Crew is the cautionary tale. Years of relentless promotions didn’t just move inventory. They trained customers to expect discounts. Full price became theoretical. Margins eroded. Brand perception followed.
Meanwhile, in the Middle East, many luxury hotels in Dubai and Abu Dhabi learned the same lesson post-COVID. Properties that held rates, even at lower occupancy, recovered faster than those that flooded the market with deep discounts and had to claw their way back up.
The math is simple. The consequences are not. The moment discounting becomes expected, it stops being a tactic and becomes your business model.
Too Big = Desperation. Too Small = Insult
Discount size is not just a financial decision. It’s a signal. Customers don’t see percentages. They interpret meaning. Too large, and you look distressed. Too small, and you look disingenuous. In both cases, you lose control of the narrative and hand it over to the market. A 50% discount signals distress. A 5% discount signals irrelevance. Both damage perception.
Research from Nielsen shows that over-discounting reduces perceived quality, particularly in premium and luxury categories. Price, whether we like it or not, is a proxy for value.
That’s why Burberry at one time chose to destroy unsold inventory rather than dump it into the discount market. Extreme? Yes. But it protected the one thing that matters in luxury: perception.
Contrast that with Target, which uses structured, progressive markdowns tied to inventory cycles. Not emotional. Not reactive. Systematic.
Even in hospitality, you see the difference. Jumeirah Group has historically leaned more on value-added packages—dining credits, experiences—rather than aggressive rate cuts. The signal is clear: value is being enhanced, not eroded.
Discounts communicate. If you don’t control the message, the market will.

Always Have a Reason or Don’t Discount at All

Pricing without context creates confusion. Confusion erodes trust. In uncertain times, customers are already questioning value, stability and intent. Random discounts only amplify that skepticism. A price cut without a clear rationale doesn’t feel generous. It feels suspicious. Discounts without a story feel arbitrary. Arbitrary pricing destroys trust.

PwC has found that price transparency and fairness are critical drivers of consumer trust, especially during uncertain times. If a customer can’t understand why they’re getting a deal, they start questioning the original price.

Airbnb gets this right with long-stay discounts. The logic is obvious: commit longer, pay less per night. That’s not desperation. That’s behavioral economics.

Amazon does the same with Prime Day. It’s not random discounting. It’s an event. A moment. A reason to act now.

In the region, Emirates has historically used tactical fare promotions tied to seasonality or route launches, not blanket price cuts. Again, a reason.

If you can’t explain the discount in one clean sentence, don’t offer it.

The Smarter Move: Give More, Don’t Charge Less

There are only two ways to make an offer more attractive: reduce the price or increase the value. One weakens your position. The other strengthens it. The difference isn’t just financial. It’s psychological. Customers don’t evaluate price in isolation. They evaluate what they get for it. This is the hill I will die on.

Price cuts reduce perceived value. Added value increases it. Research from Deloitte shows that bundling and value-add promotions outperform straight discounts in driving both conversion and loyalty. Why? Because they preserve the integrity of the price while enhancing the experience.

Apple understands this instinctively. They rarely discount core products. Instead, they offer gift cards, services or bundles. The price remains sacred.

McDonald’s built an empire on this with Extra Value Meals. Not cheaper burgers, more perceived value. 

Spotify uses extended trials to lower the barrier to entry without touching the subscription price.

Even in luxury hospitality, value-add wins. Atlantis Dubai packages rooms with waterpark access, dining or experiences. The guest feels like they’re getting a deal, even when they’re not paying less.

A customer who gets more feels smarter. A customer who pays less feels lucky. Only one of those builds loyalty.

Behavioral Discounts Beat Blanket Discounts

Not all demand is equal, and not all customers should be treated the same. Blanket discounting assumes a homogeneous market. Real markets aren’t. They’re fragmented, behavioral and highly responsive to context. The smarter move is not to discount broadly, but to intervene precisely.

Not all customers are equal. Your pricing shouldn’t be either. Boston Consulting Group ighlights that targeted promotions can be 2–3x more effective than blanket discounting because they’re tied to specific behaviors.

Uber is a masterclass in this. Discounts appear when demand needs stimulation—off-peak hours, new user acquisition—not as a constant.

Sephora rewards its best customers with tiered benefits, not universal price cuts.

In the Gulf, Noon uses flash sales, app-only deals and targeted offers to drive urgency and behavior without permanently resetting price expectations.

Discounting everyone is lazy. Incentivizing the right behavior is strategy.

Crisis Promotions That Actually Worked (Because They Were Smart)

Pressure reveals strategy. Weak brands react. Strong brands adapt. The difference is rarely resources. It’s discipline. The brands that come out stronger aren’t the ones that avoided the crisis. They’re the ones that avoided the instinct to panic.

Each of these proves a different point, not just that they discounted, but how and why.

Nike leaned into member-exclusive digital promotions during COVID, protecting margins while accelerating direct relationships with customers. LVMH largely avoided discounting entirely, reinforcing the idea that scarcity often beats desperation. Peloton used financing to reduce friction without reducing price—a subtle but powerful distinction. IKEA pushed bundles and room solutions, increasing basket size instead of shrinking price. Starbucks doubled down on loyalty-driven, personalized offers rather than blanket promotions. Accenture found that companies maintaining pricing discipline during downturns recover margins faster. That’s not theory. That’s pattern recognition.

The winners didn’t avoid pressure. They avoided panic.

The Real Risk: You’re Reprogramming Your Customer

This is the silent killer. KPMG reports that promotion-heavy environments increase price sensitivity and reduce long-term brand loyalty. Discounting doesn’t just drive short-term demand. It rewires behavior. Customers start to wait. They compare more. They hesitate at full price because you’ve taught them not to trust it.

Macy’s has lived this reality for years where promotions became so frequent that full price lost its credibility. You see the same pattern across travel platforms. Constant “limited-time deals” that are never really limited create skepticism. Urgency stops working when everything is urgent.

Every discount teaches your customer something. The question is: are you teaching them to buy… or to wait?

A Better Framework for Crisis Pricing

Most pricing frameworks break down in a crisis because they assume stability. What you need instead is a decision model that works under pressure, one that protects long-term value while still allowing for short-term flexibility. That requires discipline, not instinct.

• Define the behavior you want (trial, volume, loyalty, urgency)
• Choose the least destructive lever (value-add, bundle, financing, exclusivity, timing)
• Anchor it to a reason (event, loyalty, duration, inventory, behavior)
• Protect your reference price at all costs
• Make it feel earned, not given away

Limited Time Only

Desperate times don’t call for desperate discounts. They call for disciplined thinking. The brands that come out stronger aren’t the ones that sold the cheapest. They’re the ones that protected their value while everyone else was busy giving theirs away.

Sources: McKinsey & Company: Pricing and promotion effectiveness research; Harvard Business School: Studies on promotions and consumer purchase timing; Nielsen: Pricing perception and discount impact studies; PwC: Consumer trust and pricing transparency research; Deloitte: Value-added promotions and bundling insights; Boston Consulting Group: Targeted promotions vs mass discounting; Accenture: Pricing discipline and post-crisis recovery performance; KPMG: Consumer behavior and price sensitivity trends